The integration of Zagat reviews in Google+ is a sound strategic move for Google and Zagat, on both sides of the supply-and-demand equation.

It gives Zagat the crowdsourcing capabilities it was missing.It provides the new ‘Google+ Places‘ with volumes of quality content which sets them ahead of all other social actors in the niche, like Yelp.

More importantly for Google, this move supersizes Google+ to the stature it was still pining for, to make it the #1 SOLOMO network in the world a year after its launch.

For Facebook, heavy weather ahead.

The Zagat conandrum

Zagat is one of the oldest and most respected restaurant guides in the world. An institution, a little brother to the Michelin. The company published paper guides well before they went online, contrary to competitor Yelp.

Because of the print heritage of their publishing house, Zagat has always been picky when selecting their restaurants: they couldn’t waste valuable print space to write a bad review. Better not to review the restaurant at all.

Zagat picks good local eateries where guests can predictably enjoy dinner, and rates them on a wide variety of criteria. Zagat’s detailed reviews take care of the surprise factor: the dinners’ experience is commensurate with their expectations. Restaurant owners (hopefully) take notice of the sore points and correct them. Everybody is happy.

Yelp, on the contrary, grew online from the get-go. They ‘crowdsourced’ their ratings, allowing any and all to drop reviews on any restaurant with a We’re Open sign. Unlike space in a paper guide, online space is low-cost. There is no concern about wasting it over scathing reviews and ugly food. The largest the footprint, the better.

Zagat went online in 1999 and established Zagat.com using their carefully crafted rating system. They simply duplicated online their offline paper-based model. Their financial model is based on subscriptions and guide sales.

With the rise of Web 2.0 sites and the growing popularity of review sites, a selective guide like Zagat couldn’t grow as fast as the likes of Yelp. An article published by the NY Times in September 2008 clearly defined the issue.

Zagat reviewers take great pride in crafting detailed reviews, rating a restaurant on many different criteria. Yelpers can slap a review in 2 minutes on their favorite soapbox. Craftsmanship vs. crowdsourcing. Polish cavalry vs. German Panzer divisions. The battle is quickly over. Easy does it; free wins the day.

Though Ms. Zagat insisted her guide was never about rating as many restaurants as possible, it was urgent for her venerable house to mutate to Web 2.0. Google+ offers her this opportunity on a silver tray.

Google+ growing stronger fast

Google launched Google+ as a belated strategic move, partly in response to the explosion of Facebook as THE social network of the first decade of Y2K.

Note: I have no inside sources in Google, so this statement is my own opinion. But Google+ was a me-too product, not a disruptive product in the meaning given by Geoffrey Moore’s Crossing the Chasm. It is still not a distruptive product but is becoming an ‘integrative’ product, soon-to-become much more powerful than Facebook.

Though the number of subscribers grew fast, the sheer size of Facebook has so far dwarfed [under the skeptical pens of the pundits] the progress made by Google+ in establishing its user base. Some writers likened G+ to a ‘ghost town’, others predicted a quick death. If perception is reality, the new social network was stillborn or DOA.

Yet the numbers are impressive: G+ is about a year old and has already reached 170 million subs. Where were FB’s numbers after a year of existence?

Be it as may, Google is moving fast to flesh out the ‘social‘ in ‘G+ social network‘. The rollover of Google Places into Google+ is a brilliant strategic move which, overnight, gives it the stature it was missing. With the integration of Zagat, it dons the respectability of a true publishing house.

Google+ version 1.0

In his insightful digital opus What The Plus!, author-speaker Guy Kawasaki expands on a social media identification model dubbed Social Media Decoder which differentiates G+ from FB, Tweeter and Pinterest. (The illustration proposed by Dan Roam for Mr. Kawasaki’s ‘Social Media Decoder‘ is way cool.)

Guy Kawasaki explains that G+ is the social network that links people who didn’t know each other prior to connecting around a common passion. Accoding to his classification, this differentiates G+ from Facebook, the ‘People’ network.

Like product managers at Google, Mr. Kawasaki underlines that since these connections are made and nurtured in the confines of private Circles, a very large section of the conversation that occurs on G+ actually escapes measurement by conventional measures of social engagement. (Hence the ‘ghost town’ analogy offered by skeptics.)

That was Google+ version 1.0.
Times a-changing.

Seismic change

The merger of Google Places into G+ is an event of seismic proportions involving some 80 million Google Place pages.

For one thing, this move will drastically increase the noise level publicly shared in Google+. Google Places welcomed reviews, and judging by the number of reviews directly submitted to Google and published on Places, they have already earned their golden gloves in the heavyweight soapbox category.

People love the limelight and the 15 minutes of fame: they won’t restrict their sharing. No no no. They will go as public, as loud as they can. No Family Circle, there. Only the Public Circle will do…

But wait, there is more!

The new Google+ Places will soon enable consumers to open discussions directly with business owners in Google+ Places, the way Facebook ‘Wall’ works. Heavy volumes of conversation in the making, guaranteed.

The resulting increased noise shared publicly on G+ will foster the perception that G+ is not just a big social network among other giants, but the ‘SOLOMO network‘ (SOcial-LOcal-MObile) of the next decade, with a money-critical local component.

Just what the good doctor needed to order.

Zagat and Google+ to benefit

As far as Zagat is concerned, the future looks bright. They needed the massive amount of traffic Google+ will bring them. Yelp’s over-bearing footprint in the restaurant scene won’t be an issue anymore. Zagat’s financial future is secured, whichever way the sales of paper guides go.

Rather, the issue for the Zagat House may become how they will protect the quality of their brand now that 150+ million reviewers can write Zagat-type reviews and publish them on G+ graced with the Zagat moniker. A sweet problem, perhaps.

For Google+, the integration of Google Places is a numbers game. Hundreds of millions of users searching Google 3 billions of times per day will get used to seeing the ‘+1′ and ‘G+’ icons everywhere on their favorite search engine. The GMail users who haven’t jumped on the bandwagon yet will now start using their G+ account to share their local-centric opinions.

This takes care of the demand side of the data equation.

On the supply side, business owners know where money belongs. Google Search, Google Adwords and Google Places have all the credentials they need as money makers and traffic drivers. When demand exist, a market gets organized and suppliers start touting their goods. Google Places are already populated with business content. The trend will continue with Google+ Places.

As soon as Google+ Places allows consumers to address directly business owners on Place+ pages, the former will engage the conversation and the latter will respond because of the primary piece of real-estate that a Place+ page represent. The foot traffic is there already, no need to do anything special to create it! Location, location, location.

When 50% of local searches are conducted from a smart device and lead directly to a Google Map, you don’t leave your Google Place page empty when people start commenting on you and ask you questions. You are on your computer every day, responding to the demand and participating in the conversation. Or you are a fool, soon to be put out of business.

Facebook net loser

Business owners know that time is a precious commodity, especially in tough economic circumstances where slacking at the wheel is just not affordable anymore. Try to sell anything to any business owner and they will quickly cut to the chase: Don’t waste my time.How much will this thing make me, how fast?

Business owners constantly arbitrage their time investments. This is where Facebook draws the short sticks and walks the plank.

Whereas Google is a proven money maker, Facebook has nothing to show for. Zip. Nada. Even General Motors says it, and these guys are known to leak money like sieves.

For the business owner, the choice is clear:

Do I spend time tonight ornamenting my Facebook Fan page with cute comments and content that may engage 16% of my 350 Fans… in the hope they not only LIKE it but BUY it (please please pretty please, buy it)?

OR

Do I respond to the comments I received in my G+ Place which will be viewed tonight and tomorrow and the day after tomorrow and forever by the thousands of people who search on Google each day specifically for a business like mine?

While this is not a scientific study, it nevertheless shows people are strongly inclined to share photos showing humans, human habitat and cooked food (also a human activity).

Of note, most of these photos had dominant white, pink or earthy/golden colors, and all were very well lit, with little or no dark areas.

These observations may guide your hand when you pick a shot from a personal collection or a stock photo library to illustrate a point in your blog or website.

A final note

The phrase “A picture is worth a 1,000 words” was not coined by Confucius or some other Chinese philosopher.

Though its origins are lost in history, author Gary Martin writes that the phrase was introduced in an article published by Frederick R. Barnard in Printer’s Ink, in December 1921. According to Gary, variations of the phrase were common currency in the US in the early part of the 20th century and can even be traced back to the early 19th century.

But Printer’s Ink re-published it in 1927 as an alleged Chinese proverb. This version stuck to this day.

Now here’s the take. Guess what illustrated these words for posterity? You got it: the picture at the top of this article.

People do not always search Google through the regular search results. An increasing number of searches occur in Google Images, thanks to the wealth of pictures Google offers.

For business owners it is a great opportunity to get more of their content ranking well in Google. The question is: how do I rank a picture in the top 2 lines (for instance)?

Ranking factors

Enter a search query in Google Images (images.google.com), hover your mouse over a pictures and look at how Google describes an image.

filename

URL

Size and Description

We have to ask ourselves:

Are these factors predominant in the way Google ranks the pictures?

What are their respective influence in the ranking algorithm?

Are there common factors between these pictures?

What other (not so easily visible) factors influence the rankings?

We observed the image results for some time, and found some answers which we could use to improve the ranking of our clients’ pictures. Though we can’t pretend to have deciphered Google’s ranking algorithm for pictures, we’ll share what we found and this may help you conduct tests of your own.

Bottom line: since Google Images has become a method Googlers use to search Google and find products, it behooves on us to help Googlers find our products in this way too.

Filename, URL and description

Jimbo’s Sidecars is a LocalRanker user since 2008 [a very early adopter]. Jimbo’s specialty is renovating and converting vintage Chinese sidecars into beautiful BMW sidecars. His shop is situated in Beijing, and Jimbo ships sidecars the world over. His reputation has gone completely international.

In Jimbo’s line of business, pictures are highly important as you won’t order a $10,000 sidecar from a website and send money to China before yau have solid proof that the guy is legit and that what you buy is what you gonna get.

Jimbo’s website benefits from many back-links as each of his bikes is a remarkable piece of work, and Jimbo has a following in the sidecar community. Unsurprisingly his website has been ranking #1 since mid-2009 on his main keywords.

Looking at the first row of pictures offered in images.google.com on the keyphrase “BMW sidecar” we can see 2 pictures from Jimbo’s website sitting pretty in positions 1 and 3. We looked at each of the six pictures in the first row, and tried to identify similarities in the filenames, the URLs and the descriptions.

This first image is from Jimbo’s website. The URL is a perfect match with the key phrase. The filename does not contain any of the search keywords. The description contains the word “BMW”.

First BMW sidecar picture in Google Images

The words “BMW sidecar” appear in the filename – perfect match. The URL does not feature any of the keywords. The word BMW is featured in the description offered by Google.

Second image of sidecar in Google Images

The URL is a perfect match. The filename only has a vague relationship with the words “BMW sidecar”. The word BMW is featured in the description selected by Google.

Third photo of a BMW sidecar in Google Images

The filename offers a pefect match. The URL is irrelevant. The description excerpted by Google offers both words “BMW” and “sidecar”.

Note that Google does not care that the words are separated. It identifies them separately as relevant to the search query. Keep this in mind when optimizing your anchor texts: you can throw some words ‘in between’ to add diversity into your link text.

4th image of a BMW sidecar in Google Images

In this photo the URL and the filename are irrelevant, but the description excerpted by Google comprises both keywords.

Again, the keywords are separated. The key phrase “BMW sidecar” is not analyzes as a semantic unit (noun + modifier) by Google but as 2 distinct and separate keywords.

5th photo of BMW sidecar in Google Images

In this picture, the filename features an exact match. The “-” is not taken into consideration by Google. The URL is irrelevant.

The description excerpted by Google features the 2 keywords. There again, separated by a “-“, which confirm that each keywords is analyzed on its own for matching purposes with the search query.

It may also mean that “-” are irrelevant in Google’s eyes. But this is not a certainty and we will see later that the absence of separator (like “-” or “_”) can prevent Google from identifying a keyword as a possible match.

6th image of a BMW sidecar in Google Images

From these 6 images featured on the first result line in Google Images, we see that the presence of keywords in the filename, the URL and/or the description plays a role in the degree of relevance of the picture in Google’s eyes.

This observation has been confirmed many times, and our team always name picture files using keywords. The use of keywords in the URL is of course a given [though there are still health practitioners who believe “DrJohnSmith.com” is a good URL… even if they are not the best-known brain surgeons in the village.]

The next question is: Where does the description come from?

Google’s preferred sources for picture data

In the distant past of SEO (a few light years ago), we used to “stuff” the Alt tags of the pictures with keywords. Alt tags substitute for pictures when the pictures don’t load: at least visitors would read a description of what should be there – instead of just looking at a gaping hole. [Which leaves me wondering what excuse did we serve our clients when a picture didn’t load in the browser? Heck if I remember….]

Keywords stuffing has long been pushing daisies, and though dutiful web designers still describe their pictures with ‘alt’ tags, Google just doesn’t care anymore.

Google has long switched for contextual description, and snips the description of the picture displayed in Google Images directly from the copy of the website. OK, but where exactly from?

Test #1

For our first test to identify where Google selects the words describing an image, we entered “realtor in tucson az” as our search query in images.google.com. This picture is the first one served by Google.

First image to show for “realtor tucson az”

Note that the filename andthe URL of the image, and its description all feature the keyword “Tucson”. The description specifically features the words “Tucson Arizona real estate“.

Consistent with previous findings, Google rates this image very relevant to the search query “realtor in tucson az“.

Google identifies “realtor” with “real estate” and “az” with “arizona” which confirms that certain keywords are fully interchangeable in Google’s database. Work on your text links with this in mind.

We then went to the page where Google found the picture.

Note where the text of the description shows: above the picture, immediately next to it. Note also the presence of the keywords (yellow circles) around the picture.

Where does Google find the description text of the picture?… Immediately next to it…

Test #2

The second image to appear in images.google.com under the same search query is found by Google on the website Realtor.com.

Second image for the query realtor in tucson az

There again, consistent with our previous findings, the URL and the description of the picture feature the keywords of our search query.

We have seen that “Realtor” was interchangeable with “real estate“, just as “Arizona” and “az”. “tucson arizona” match our search query.

Note that the “,” between “tucson” and “arizona” has no impact on Google. Note also that “real estate” would usually be writen “real-estate” but this does not prevent Google to identify the word with “realtor“. The “-” has no bearing on the search results. Lastly, note that our query featured the word “in” and that Google ignores it completely.

Where did Google find these words “Find Homes For Sales in Tucson, Arizona”?

Here is the page on which Google found the picture. Note the position of the words: above the picture, close to it. Note also the presence of keywords in the proximity of this picture (yellow circles).

The words contained in the picture description arepositioned above the picture, very close to it

Test #3

The third picture in the results of images.google.com shows the same pattern as in our previous tests. The keywords match closely our search query.

Third picture selected by Google on “realtor in tucson az”

The same pattern repeats itself. The keywords of our search query are detected as a match by Google in this picture.

The next screenshot shows that the description associated by Google to this picture was also at the proximity of the picture. The site shows it on the left of the picture: in terms of coding, “left” of the picture and “above” the picture are the same. The text could have been placed visually above the picture, this would not have affected the way Google looked at it.

Page on which Google found the above picture

Again, note the presence of keywords in the description and around the picture.

For these 3 tests, we can see that Google likes the keywords to be placed above and around the picture, very close to it. We also see that if we want Google to describe our picture the way we intend it (rather than leaving it to Google to select some random sentence in our page to describe the picture), we should place our descriptive text above the picture and close to it.

Is it important to describe the picture the way we intend?

Place yourself in the shoes of a Googler. You see rows of pictures in a page, and some of them seem more interesting than others. Before you click on any of them though, it is likely that you will hover your mouse over those more interesting, and read the caption. We have been trained since an early age to read words associated with pictures: in vocabulary books first, in school textbooks then, later on in advertisements, then in newspapers.

A quick glance at the caption will tell you if you should continue and click on the picture to go to the website and see in a bigger size. If the caption is interesting and relevant, the image wil win your click more often than not. You may already have decided to click on the image to follow it to the website, but the caption will comfort you in your decision.

Direct marketers know this. Newspaper editors know this. You will be looking for the captions of the photos shown to you. You will want to know the context of the photos. You will want to get the idea of the story told by the picture BEFORE you read the real story.

This is the reason why newspapers like USA Today put half the picture in the upper part of the first page (“above the fold“) and the rest of the picture and its caption in the lower half of the page. When you see the newspaper on the stand, and spot half the picture at the center of the upper part of the page, you tend to pick up the paper and unfold it to get the full picture and read its caption. At this point, the paper is in your hands, not any more on the rack. Does that make you more likely to buy it? You bet it does.

Additional notes

In the third test example, the picture picked up by Google is actually the second picture on the page, NOT the first.

Check out the first picture found in the body of the page: note the presence of keywords next to the picture. All seems good. So why did Google shun this picture and selected the second one in the page?

Why is this picture shunned by Google?

Look at the picture in Test #1. This is the exact same picture. This is a perfect example of a very important Google policy: duplicate content is not welcome.

“Duplicate content” is text, photos, videos that Google already found on the web and already indexed in its database. Google is not interested in serving twice the same content to Googlers. Google has become sufficiently intelligent to recognize content that only duplicates, even with alterations, similar content already in existence.

The same goes for photos. Photos can be identified by color, color variations, size, copyright mentions embedded (watermarked) into the file. Here, Google has identified that this photo presented exactly the same characteristics as the photo used in Test #1. And even if the keywords describing the photo and placing it in context were relevant, Google just did not select it.

Bottom line: use your own photos… Or be shunned.

I will soon publish a Part II to this article. Meanwhile, get to work to optimize your site.

It is a strategic move that has been for years in the making and aligns perfectly with Google’s mission “to organize the world’s information”. It is also in direct alignment with Google’s strategy to help small businesses compete with Corporate America on a more equal footing.

Google IS the biggest online business hub in the world. It serves more businesses any day of the year than Facebook in a full year. Contrary to Facebook, Google is positioned in your mind as a business-related resource. Facebook is a friends & family resource. NOT a business resource.

G+ will not replace Facebook as the Friends & Family network (unless of course, Facebook folds). But it completely dwarfs Facebook as a business social network and renders it almost useless because it’s better, bigger and more in-tune with everybody’s search habits.

What will the merger change for your business?

The merging of your current Google Place with Google+ does not really upset the make-up of your listing. But it gives you a lot more possibilities to interact with your clients and your market.

Because G+ is a social network — not just a search engine — the ranking of your listing will depend to a large degree of how you interact with your community. The word “G+ Circles” must become part of your everyday vocabulary.

Google Places had its own ranking rules: early in its existence, the number of ‘reviews’ your business got was the topmost ranking factor. But reviews got abused with unethical SEO practices. Google progressively discounted them and became much more selective in its sources of reviews.

Google Places also relied heavily on ‘citations’. Citations are instances of your business being mentioned in local directories and local social networks. Again, abuse of the system by SEO practitioners resulted in citations being re-evaluated by Google. Was that citation a genuine mention of a business by a client in a local market, or just a trick to get a better ranking in Google?

Citations went down the drain as a ranking factor. Google lives and learns. It is a highly intelligent evolutionary system.

Reviews and citations still do count in your business ranking. But not as much as before, and most importantly for you, is your business cited in Google’s trusted sources?

Google+ is here. And the ranking recipe is about to change.

The position of your new Google+ local listing in the search results will be directly impacted by the reach of your G+ Circles. The more your listing is shared, the wider your Circles, the better your position.

Can one trump the system?

Highly unlikely.

G+ Circlesare true social micro-networks because they reflect the degree of information that you are willing to share with the people you connect to. The Family Circle has privileged access to information that the Acquaintances Circle hasn’t. You won’t share the same data with both.

From an SEO standpoint, it seems therefore reasonable to assume that when you ‘+1‘ a business you have interacted with, the way you share it with your various circles will affect the weight of the recommendation on this business listing in Google+.

A good recommendation shared with multiple Circles could have more impact on the business than a good recommendation only shared with Family. A bad recommendation shared only with Family could have less impact on the business’s G+ listing than a good recommendation shared with all Circles.

There are no studies yet on this topic: but they will come. SEO practitioners will want to determine with some degree of certainty if:

Sharing a business with Family has more impact than sharing it with Friends;

Sharing a business with all your Circles has more impact than if it shared with part of your Circles only;

There is some sort of a pecking order for these Circles (more vs. less impact on positions in the search results)

Google+ is based on trust: the closer to you, the more trusted.

In this respect, Google+ is conceived along the lines of a model that has proved itself over 10,000 years of history: the Chinese society and its circles of ‘guanxi’.

Because of the very nature of the G+ Circles, it will be much harder and time-consuming to abuse the system.

Trust results in use. When people know they can trust a tool and the tool itself is useful, people use the tool. Take Angie’s List: it owes its success directly from the fact it’s very hard to abuse the website. The vast majority of the reviews are written by genuine people who genuinely used the services of the business.

Google Places was already trustworthy, even if in the past the review system was abused. Google+ will be even more trustworthy because — by inherent design — it is very, very hard to manipulate it.

G+ is a social network, albeit a business-oriented one. Your local community already interacts with your Google Places (notably through Google reviews). Locals will interact even more with your G+ listing because G+ is becoming part of our daily lives: Google search and local search, GMail, YouTube, Google Maps, Google Images.

And fresh off the boat, Google’s new video conferencing capabilities: ‘Hangouts’!

The bottom line

For you, business owner, it means one immediate plan of action.

You have to establish and maintain your G+ profile and make it evolve continually, sharing recommendations, expanding your circles in reach and numbers, adding photos and comments on your business, interacting with your local community.

Whatever you do on your Facebook Fan page, you have to do on your G+ listing.

I recommend that you make an arbitrage in your time allocation: favor Google+ over Facebook. You don’t need to do this at once, but in the next few months you will. More importantly, you have to start now and make a habit of updating your G+ profile daily.

I will publish a ‘How To’ guide and send it personally to all LocalRanker users in the next few days.

LocalRanker has also commissioned a scientific study on Google’s results in the Tucson market: we will share excerpts of this study with our Tucson clients.

We want to see you succeed in your efforts to be ranked high in Google and receive traffic on your site. Knowing what to do with Google+ is a sound foundation to a sound SEO strategy.

A few days ago I posted a comment I had written on an article published regarding the possibility of a post-Facebook world. The author was positing Facebook’s ultimate demise in the hands of competing social networks and asked his readers if they could imagine themselves in a world without FB.

In the wake of Facebook’s IPO upheaval, I read a couple of interesting articles showing there might indeed be some ground under the feet of those who stand looking, shaking their heads, at the Stairway to Heaven offered to us by Wall Street.

One such article related to a study paper published by a pair of math wizards hailing from Zürich, Switzerland. Using a simple but solid math model and an ‘estimated profit per user per year of $1, the Swiss study concludes that FB is grossly overvalued: the social network would not be worth anywhere close to a cool $100 billion, but somewhere between $15 billion and $30 billion. Much less cool.

Some expert even downgraded the estimate bracket, underlining a shortcoming of the model — user attrition was not taken into account. Somewhere else, a commentator emphasized on the contrary that FB’s revenue model would be boosted when its management adapts the business model by changing the way ads are served.

FB’s revenue model is based on the capacity of the social network to serve advertising relevant to the personal demographics of each of its users. This is the crux of the issue, since the potential capability of FB to customize your ad experience has been the subject of much ink spill.

Yet, I contend that tailoring ad is only one side of the coin. The FB side.

The other could be summed up in this question: “Do you even look at FB ads?”

Another blog post published on Tech Buzz tackled the issue with a severe “Facebook is a fraud” headline… and words to back it up inside the copy. According to its author, the post contends that Mr. Zuckerberg and investment bank Morgan Stanley are knowingly selling fool’s gold to the suckers-born-every-minute that we are.

Among the sources quoted in this post, one poked me in the eye: an article published in Forbes about General Motors’s decision to stop advertising in Facebook. The article turned out to be about comparing the odds of SuperBowl advertisers making similar decisions. But I followed the story to Yahoo News, and indeed GM doesn’t like FB ads anymore and recently decided to reallocate a $10 million/year budget elsewhere.

Wow. This can’t but have you pause and think.

Corporate America is notorious for sorely lacking in the department of “Advertising ROI Control”. Since David Ogilvy defined ‘branding’ as the nec-plus-ultra of advertising, Madison Avenue has been all about selling ‘the value of branding’.

Direct marketers —who know the value of a dollar— characterize this mantra as “blowing smoke up your ass.” We, small business owners, tend to rate the latter as ‘probably more right’ than the former.

After all, take care of the pennies and the dollars will take care of themselves.

So if GM pulls out of FB because “paid ads had little impact on consumers“, the problem must have been glaring and glowing in the face of their advertising department for quite a while. The light bulb must have lit up one bright shiny day… A bean counter must have found that 3 new car orders on the books after a cool million-buck investment in an ad campaign wasn’t so hip after all.

GM’s pullout tends to confirm that FB ads aren’t working that well, and that the eye-tracking study I alluded to in a prior comment might be just right on the money. Since FB’s business model and ad revenues are paired tighter than Siamese twins, that can’t be good news for Mark Z and his friends in the Hamptons.

As if it weren’t enough bad news, doooooong rung another knell: following revelations that FB’s institutional investors were the only ones to be appraised of estimate downgrades during FB’s IPO —such news having been kept from retail investors— a class action lawsuit has been instigated against Mr. Zuckerberg et al. in California.

How does this hubbub relate to us all, small business owners?

Well, in two ways.

Facebook performs a valuable service by allowing us to share things we like, things we do, things we see, more often and more widely than we would in our everyday lives. Facebook fulfills its mission as a true social connector in the virtual world.

But there lies the catch. I contend that Facebook was never branded as a business vehicle. It is meant to “remain always free”. The Facebook experience is the quintessential free ride. So much so that we tune out FB ads and shun salesy posts in Fan pages. Al Ries and Jack Trout wrote extensivly about the phenomenon in their books on the Positioning Theory: the mind can’t easily manage changing its perception of a brand once it has been pigeon-holed somewhere.

I see friends starting to advertise on FB. I say: pay attention to your return. Do people see your ad? Do they contact you?

The other way these events should affect us relate to the time we spend on Facebook tuning up our Fan page, socializing with other business owners, spreading the good news about ourselves, etc., in the hope of drumming up some business.

Not to say that Fan pages aren’t a genuine communication channel. They can be. But how big exactly?

My friend marketer extraordinaire Mike Maunu just shared an interesting statistic on his Wall: Facebook disclosed earlier this year that the average post on a Fan page reached only 16% of the Fans. Our own tests on the LocalRanker Fan page show a below-average engagement comprised between 4% and 7%.

‘Your content sucks”, you might say. And you may very well be right. Still, 16% is nothing to call home about, don’t you think?

Remember this percentage is just Fans looking, commenting, liking, sharing.
Not Fans buying from you.

As small business owners we have to allocate our time wisely. Statistics, studies, ripples in the pond… All coincide to tell us that we might be well-inspired to weigh our options carefully: should spend time marketing my biz on Facebook, or would I be better off working on some other form of marketing… e.g., preparing a killer offer to mail to my existing client list?

Mike’s post and the other blog posts got me thinking these last few weeks.

My 2 cents: Treat Facebook as a channel among many. Not as your main communication asset.

Or you risk waking up one day to the fact you lost much more than those fools who bought FB’s gold at $42 on IPO day and found themselves at $31 just a few days later.

“Most internet marketers I know who can boast a measure of success have the same mantra: ‘Use FB to increase your visibility, use your site to turn your fans into clients”. Promote your Fan page to your prospects, leads, clients, friends. Then move them to your site and subscribe them to an e-mailing list.‘

“Since your LocalRanker site will re-post to your Fan page every article you publish on it [on your site], your fans will be updated with your newsfeed — even if they never come back to your Fan page once they have ‘Liked’ it.”

From a business perspective, this is the primary, essential, most important difference between a website and a Fan page.

Your website is your property, your asset, you own it.

You want to increase its content and visibility in Google. You want to increase your number of pageviews, your stick rate (how much time do your visitors stay on your pages), the number of your unique visitors. You want to promote your site everywhere and anywhere, using any means available.

By doing so, you are building an asset, an intangible asset, which add durable value to your business and will count towards increasing the valuation of your business the day you sell it.

By comparison you NEVER own your Facebook Fan page.

You have a lease on it and your landlord (FB) can evict you at any time.

So use your Fan page as another promotional channel as long as and as much as you can (in compliance with FB’s terms of service). This is a valuable tool. This is a birddog tool.

Just don’t start believing you have an asset in your Fan page. You don’t.

If Facebook prevents you from posting, you won’t be able to post. If Facebook clears up your account, you will lose everything. The Fan page is NOT a business asset. It will not increase sensibly the valuation of your business the day you sell it. It is a marketing tool.

Google and Facebook are pushing your business to use their Fan pages and Circles. They made it easy, and as their products evolve their features make them even more useful for businesses.

On top of that, they go for the free model. Facebook even advertises that it will always be free. Great.

The Plumber Story

“Yes, my name is Joe Schmoe and I am a plumber fighting a bad economy. I love free, free can’t be beat. Everybody and their brother is on Facebook, why not me? I’m all over the Fan page thingie.

“I’ve only got 20 Likes so far but hey, give it a little time. Doesn’t Google say the same about Google+? Rome wasn’t built in a day, and I’m building my Joe Schmoe Plumbing business and its assets.

“My social media planning is kind of simple: I just post photos of Joe Schmoe Plumbing products and services, a coupla videos of broken pipes and some funny comments people like to read. If I get lucky I’m gonna go ‘viral’. So says cousin Jimmy who’s a pretty smart fella with computers.”

Building my business assets

“The way I look at it is Facebook is here to stay, and it makes sense to build a page now, it can only go up from there. What’s there to lose? It’s free and that page is mine and mine only. Nobody can steal it, so says Facebook.

“Sure, I get to invest some time into it, and my time has a price tag. But that’s how you build solid assets, you take your time and you dig the ditch. Gotta look at the long term, don’t you?

“I know plumbing isn’t very sexy, this Fan page ain’t gonna be an overnight star but the buzz will go on and if I show my face enough and gather more Fans, my page gonna get me some buzzzzzz and some referrals. I’m building an asset for my business.

“I’ll do the same in Google+ once I get my thing going in Facebook. I read somewhere social media is all about building branding, building brand equity. Equity is good. Down the road, that’s more money I’ll fetch when I sell the biz.”

Pause. Stop. Rewind.

Joe is right in investing time building his Facebook Fan page.

Does he go about it the right way? That’s an open question. Plumbing isn’t very sexy so he’d better have something of good value to offer people going to his Fan page. How to make your page interesting even if your business is unappealing. But that’s another topic.

What matters to Joe is that he’s building a channel leading people to his business. And investing time over a long period to get that channel activated to produce referrals.

If Joe succeeds in establishing this channel, Facebook will have become part and parcel of his sales strategy. A business asset?

Assets vs. cashflow

An asset is defined as:

“Property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.“

Is a Facebook Fan page a ‘property’? Yes. But.

A Facebook Fan page is composed of 2 parts: the content of the page, and the software that houses the content.

Clearly, the law gives you ownership of the content you create. You gave Facebook the right to broadcast this content for as long as they agree to host it. But the content is yours.

What’s never yours is the software, the servers and the business called Facebook. Unless of course your name is Mark Zuckerberg. But if it were, you wouldn’t be reading these lines.

Even if your content and direct or indirect relationships with people explain the ‘Likes’ you get, the channel through which you obtain those Likes is Facebook. In fact, if this were not for Facebook, you would not be able to get ‘Likes’, lest presenting your case to people who discover your services through Facebook.

What does this mean, Doctor?

If you leave Facebook and close your account, you can take all your content with you, and choose to use it on another social network. But you can’t take the ‘Likes’ and you can’t take those ‘Fans’ and ‘Friends’ with whom you do not have a personal relationship.

In other words, you would have to re-build a presence on another social platform, and make it known to new ‘Friends’ and ‘Fans’ — or any words used by this new platform. Google+ for instance. You would start from scratch, with exactly the same risk of losing it all.

Indeed, the risk of losing it all exists. Facebook can find you in violation of their Terms of Service and shut down your account. Terms of Service can be violated any number of ways, and from anecdotal evidence the rules aren’t always that clear.

When your account is shut down, you lose everything: content and friends.

This is the risk you run hosting your content with Facebook. You agree to their Terms of Service, and you don’t hold the keys to the door.

The channel never belongs to you. It is never your property. Your Facebook Fan page is not at anytime your business asset.

If it brought you referrals and revenues, it was a cashflow generator. Big or small, but just a cashflow generator.

Does Facebook increase the resale value of my business?

Can you hope to ‘sell’ the channel when you sell your business? Technically, you could never sell something that doesn’t belong to you. No sales agreement listing the assets of a business put up for sale should feature the words ‘Facebook Fan page’. This could potentially put you in trouble with the law.

You could sell the ‘content of a Facebook Fan Page’ but only if you had a complete copy of it. And the value of the content itself would be greatly diminished (quite possibly to zero) if the channel (Facebook) did not exist anymore.

Would you be able to put a dollar value on your Facebook Page and sell it? No.

Does your Facebook presence increase the resale value of your business? Only indirectly, to the degree that the clients you got coming from Facebook left money on your table — therefore increasing your revenues and profits.

In other words you would not sell the sales channel (Fan Page) but the clients already acquired. Major difference.

What about ‘brand equity’?

The expression ‘brand equity’ is used by social media experts when talking about the effects of a social media strategy on the products or services of a business.

The expression has a variety of definitions, some of which more complete than the others:

“The positive differential effect that knowing the brand name has on customer response to the product or service.”

In other words, if the overpriced tee-shirt you hold in your hands did not bear the brand Abercombie & Fitch, would you buy it or leave it?

Applied to your business, can your Fan page generate equity for your brand? All proportions taken into consideration, your brand may gather some equity in a specific locale.

The case of Truly Nolen

In Tucson, for instance, the brand Truly Nolen is ubiquitous and anecdotal evidence suggests that anyone who has lived in Tucson for over a couple of months is familiar with the brand.

They haven’t achieved their fame through Facebook but by posting vintage cars in high-traffic, high-visibility spots all around Tucson, and running VW Beetles with mouse tail and Mickey ear appendages. They do pest control.

Did they build brand equity for their business? Coming back to the above definition of brand equity, it could be said that Truly Nolen will probably come first to your mind when your home is infested with pack rats. They have achieved high visibility for their brand. Is it enough to sway the decision of a potential customer who considers his options: (a) Do I go with Truly Nolen to get rid of these pests? Or (b) do I call the guy next door just to get another estimate and compare prices?

If a large segment of the market selects (a) above, Truly Nolen has gained equity for their brand. This equity has a cost however: the cost of purchasing dozens of vintage cars, painting and maintening them, renting the spots where to park them, and the cost of fixing their fleet with Mickey Mouse ears and tails. [Not to mention incidental costs such as technician turnover: driving a Mickey Mouse car can’t be that good for self-esteem, can it? Just saying.]

Back to you

Can your Facebook Fan page build brand equity for you?

The answer lies in a comparison between the definition above and your sales experience.

“The positive differential effect that knowing the brand name has on customer response to the product or service.”

Does your Facebook Fan page generate enough ‘positive differential’ for your service that potential customers will buy just because they hear and read about you?

For most businesses, this isn’t the case and never will be. What will definitely create brand equity is excellent service and products at prices commensurate with the market, and customers so happy with the service/products that they become advocates of your brand.

If this transfers over to your Facebook page in the form of rave testimonials and ‘client engagement’ on your page (customers commenting, sharing, liking and talking about it), your Fan page becomes an excellent vehicle to carry farther the brand equity you are building in your services or products. But it does not start with your Facebook Fan page.

Can you achieve this effect if your product or service is top notch? This will depend on your degree of Facebook marketing savvy.

At the end of the day

It all boils down to customer satisfaction. Facebook is only a business vehicle that carries a great or a small number of passengers, more or less slowly or quickly. The size of your Fan base will depend on that of your existing and future client base, and on your skills in engaging your clients in your social media strategy.

Your Facebook Fan page will never be an asset of your business. It can become a sales channel, a cash-flow generator, a lead creation machine. For these qualities alone, it has a place in your business model. But you won’t be able to sell the channel.

Lastly, it may contribute to building your brand equity, but I wouldn’t hold my breath on this. I leave you the brand equity bet, and I take the cash-flow funnel any time.

Here is a new infographics we created around the concept of “virtuous spirals” (ever-growing phenomena that are fueled by the continuing coincidence of positive actions).

In clear speak, it means the possibility to grow actively your Facebook traffic by doing the right things over and over again. We name 6 actions and attitudes that fan the flames and help grow your audience and their engagement with your brand, shop, biz, practice.

Note: SEO specialists and web agencies can freely share this file with their clients to help them with their social media strategy.

Without further ado, here is the infographics. The file can be downloaded right beneath.